Why does a rise in national income not automatically prove economic welfare in macroeconomics?
Answer and explanation
Correct answer: Income distribution, environmental quality, and non-market services also matter.
National income measures the monetary value of production or income, but welfare is broader. A country may experience higher income along with unequal distribution, pollution, insecurity, or reduced leisure. Unpaid household work and other non-market services may also be excluded, so income alone cannot establish welfare.
Frequently asked questions
What is the correct answer to this question?
Income distribution, environmental quality, and non-market services also matter.
Why is this the correct answer?
National income measures the monetary value of production or income, but welfare is broader. A country may experience higher income along with unequal distribution, pollution, insecurity, or reduced leisure. Unpaid household work and other non-market services may also be excluded, so income alone cannot establish welfare.
Which subject and chapter does this question cover?
This is a Class 11 Economics question. Chapter: National Income and Related Aggregates. Topic: GDP and Welfare.
